Income Tax Appellate Tribunal - Delhi
Dcit, New Delhi vs M/S. Raju Investments (P) Ltd., Delhi on 21 January, 2021
1 ITA No. 302/Del/2014
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: 'F' NEW DELHI
BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER
AND
MS SUCHITRA KAMBLE, JUDICIAL MEMBER
ITA No. 302/DEL/2014 ( A.Y 2009-10)
(THROUGH VIDEO CONFERENCING)
DCIT Vs Raju Investments (P) Ltd.
Central Circle-03 WZ-183, Gali No. 4
New Delhi Lajwanti Garden
Delhi
AAACR7499H
(APPELLANT) (RESPONDENT)
Appellant by Smt. Sushma Singh, CIT DR
Respondent by Sh. Suresh Gupta, CA
Date of Hearing 13.01.2021
Date of Pronouncement 21.01.2021
ORDER
PER SUCHITRA KAMBLE, JM
This appeal is filed by the Revenue against the order dated 13/11/2013 passed by CIT(A)-1, New Delhi for Assessment Year 2009-10.
2. The grounds of appeal are as under:-
1. "The Commissioner of Income Tax (Appeal) erred in law and on facts in deleting an addition of Rs.2,32,00,000/-u/s 68 of the Act w.r.t. procurement of accommodation entries through share application money from non-descript companies.
2. The Commissioner of Income Tax (Appeal) erred in law and on facts in deleting an addition of Rs.l,16,000/-made by the AO w.r.t. commission paid @.5% for procurement of accommodation entries through share application 2 ITA No. 302/Del/2014 money from non-descript companies.
3. The Commissioner of Income Tax (Appeals) erred in admitting additional evidence under Rule 46 A.
4. (a) The order of the CIT (A) is erroneous and not tenable in law and on facts.
(b) The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal."
3. The assessee is a non-banking finance company and had been engaged in the business of providing loans as investment in shares and securities of other companies. The return of income u/s 139(1) declaring an income of Rs.88,919/- was filed on 31/3/2010. The Assessing Officer computed the total income of the assessee at Rs. 2,34,04,919/- thereby making addition related to unexplained cash credit u/s 68.
4. Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) allowed the appeal of the assessee.
5. The Ld. DR submitted that the CIT(A) erred in deleting the addition u/s 68 of the Act with respect to procurement of accommodation entries to share application money from non-descript companies. The Ld. DR submitted that the CIT(A) was not correct in admitting additional evidence under Rule 46A without giving proper justification. The Ld. DR submitted that the CIT(A) has not given adequate opportunity and totally ignored the remand report given at the appellate proceedings by the Assessing Officer. The Ld. DR further submitted that the Inspector report about verification of the share applicant parties was totally ignored by the CIT(A). The Ld. DR pointed out the Inspector report from the paper book and submitted that the parties relating to share accommodation entry were not found and the address was not proper and, therefore, genuineness, creditworthiness, was not at all taken into account which was not proved by the assessee at the assessment proceedings as well as 3 ITA No. 302/Del/2014 at the appellate proceedings. The Ld. DR further submitted various decisions which are as follows:-
i) Subhalakshmi Vanijya (P) Ltd. vs. CIT (2015) 60 taxmann.com 60
ii) Bisakha Sales (P) Ltd. vs. CIT (2014) 52 taxmann.com 305
iii) Pr. CIT vs. NRA Iron Steel Pvt. Ltd. in SLP (Civil) 29855/2018 order dated 05.03.2019
iv) The Ld. DR also submitted that the CIT(A) erred in deleting the addition of Rs.
1,16,000/- with respect to commission paid at 5% for procurement of accommodation entries through share application money from non-descript companies.
6. The Ld. AR relied upon the order of the CIT(A) and further submitted that the Assessing Officer has not confronted the Inspector Report as well as the confirmation filed during the assessment proceedings were not taken into account despite all the parties which were summoned under 131/133 of the Act has responded. The Ld. AR relied upon the decision of the Superb Developers of the Coordinate Bench wherein some of these parties were concerned and the group is a sister concern of the assessee company herein (ITA No. 54, 55, 56/Del/2014 and ITA No. 403/Del/2015 for A.Y. 2008-09 to 2011-12 order dated 09.07.2018).
7. We have heard both the parties and perused the material available on record. It is pertinent to note that Inspector Report has clearly stated the wrong address and therefore, the same will not prove the case of the Department that the share applicant parties were not properly examined. The CIT(A) has taken into account all the evidences and has confronted the same to the Assessing Officer for which remand report was filed by the Assessing Officer. The CIT(A) held as under:
4 ITA No. 302/Del/2014"4.2 I have considered the assessment order, the submissions made and the documents filed. I have already held that the appellant was prevented from discharging its onus on account of insufficient opportunity and was also prejudiced and, accordingly, I had admitted the additional evidence filed by the appellant. I have examined the evidence filed before the AO as well as the additional evidence filed during these proceedings. My observations / findings with regard to each case are as under:
Sl. Name of the Amount OBSERVATIONS / FINDINGS No. applicants (Rs.)
1. APT Fincap (P) 22,00,000 ITR for AY 2009-10 with audited balance Ltd. sheet, ITR for AY 2011-12, share application and bank statement are filed.
Bank statement does not indicate any cash deposit to establish that appellant introduced its own money. Adverse view cannot be taken.
2. Aurochem 30,00,000 The case was assessed u/s 143(3) for AY Softech (P) Ltd. 2007-08 on 29.12.2009 and u/s 143(1) for AY 2009-10 on 04.09.2010 by the Department itself. Therefore, the question of non-existence of this co. does not arise.
3. Chintapurni 30,00,000 ITR for AY 2009-10 with audited balance Builders (P) Ltd. sheet, ITR for AY 2011-12 and share application are filed. Bank statement filed subsequently does not indicate any cash deposit to establish that appellant introduced its own money. Adverse view cannot be taken.
4. Kay Builders (P) 50,00,000 ITR, audited balance sheet, with Order Ltd. u/s 143(1) for AY 2009-10, ITR for AY 5 ITA No. 302/Del/2014 2011-12, share application and bank statement are filed. Bank statement does not indicate any cash deposit to establish that appellant introduced its own money.
Adverse view cannot be taken.
5 Multitech 45,00,000 ITR For AY 2008-09 was filed on Semiconducetors 29.03.2009 and ITR for Ay 2011-12 was (P)(Ltd) filed on 29.03.2012. Copies of audited balance sheet and bank statement were also filed Case was assessed u/s 143(3) on 21.12.2009 for Ay 2007-08. Therefore, the question of non-existence of this co.
does not arise.
6 Pasand 15,00,000 Case was assessed for AY 2009-10 u/s Marketing (P) 143(1) on 4/09/2010 and ITR for Ay Ltd 2010-11 was filed on 5.09.2010. Copies of audited balance sheet and bank statement were also filed. Therefore, the question of non-existence of this co. does not arise.
7. Skylink 20,00,000 ITR for AY 2008-09 was filed on Software (P) Ltd. 2.03.2009 vide acknowledgement No. 604111502220309 and ITR for AY 2011-
12 was filed on 31.03.2012 vide acknowledgement No. 381257601310312. Copies of audited balance sheet, share application and bank statement wee also filed. Therefore, the question of non-existence of this co.
does not arise.
6 ITA No. 302/Del/20148 Wisman 20,00,000 Copies of audited balance sheet for the Marketing (P) year ending 31/03/2006, share Ltd. application and bank account has been filed. IT records could not be produced.
However, banks statement does not indicate any cash deposit to establish that appellant introduced its own money.
Adverse view cannot be taken.
4.3. I also find that the allegations of the revenue regarding accommodation entries taken by the appellant have no basis in view of the revenue's own assessment in some cases were no such conclusion was made, lack of any cash deposits in the bank accounts of the share applicant companies and also in view of the fact that no evidence was found during the search indicating such activity or confirming such allegations. In the above fact and circumstances of the case, the additions of share application money as unexplained credits u/s 68 cannot be legally sustained and is deleted. These grounds of appeal are allowed accordingly."
8. We find that the Assessing Officer chose not to consider the evidences on merit and simply stated that these parties were not found. Thus, the assessee in our opinion has proved the genuineness, identity and creditworthiness of these parties. The case of the sister concern in Superb Developers (supra) has also dealt with some of the parties involved in the present assessee's case. We find that the Tribunal in Superb Developers (supra) held as under:
"8. We have heard both the parties and perused the material available on record. As regards Ground No. 3 of the Revenue's appeal, the CIT(A) rightly taken into considerations the evidence filed by the assessee during the Assessment proceedings. There was no fresh evidence submitted by the Assessee. This fact was not denied by the Revenue. Therefore, Ground No. 3 7 ITA No. 302/Del/2014 of the Revenue's appeal is dismissed. On merit of the appeal filed by the Revenue, it is pertinent to take note about the order passed by the CIT(A) in Assessment Year 2006-07 which was handed over by the Ld. AR during the hearing. The CIT(A) for A.Y. 2006-07 held as under:-
"I have considered the assessment order, the submissions made and the documents filed. I have already held that the appellant was prevented from discharging its onus on account of insufficient opportunity and was also prejudiced and, accordingly, I have admitted the additional evidence filed by the appellant. At present, the appeals involved in respect of the appellant on the issue of share application / share capital are for AY 2006-07 (A.No.361/13-14), AY 2007-08 (A.No.360/13-14), AY 2008-09 (A.No.359/13-14), AY 2009-10 (A.No.358/13-14) and AY 2010-11 (A.No.357/13-14). The share capital raised from different companies in these years is summarized in the table given hereunder:
Sl Applicant 2006 2007 2008 2009 1010
No Companies -07 -08 -09 -10 -11
. ASSESSMENT
YEAR s
1 Oracle Cables 1000000 1500000
Pvt. Ltd.
2 Arsey Hosiery 1000000
Pvt. Ltd.
3 Twicne Traders 1000000
Pvt. Ltd.
4 Chardham 1500000
Impex Pvt. Ltd.
5 Vidur Builders 1500000
Pvt. Ltd.
6 Tejender 1500000
Fabrication
Pvt. ltd.
7 Kaiser 800000 800000
Marketing Pvt.
Ltd.
8 Indolon Hosiery 1200000 425000 1000000 1500000
P Ltd.
9 Brainsoft Info 45000 500000
Consultannts
Pvt. Ltd.
10 Chintapurni 500000 2000000 1000000
Builders Pvt.
Ltd.
11 Midas Touch 1300000 1000000 1000000
Medica Pvt.
Ltd.
8 ITA No. 302/Del/2014
12 Multitech 1900000 1000000
Semicondsuctor
s Pvt. Ltd.
13 Ribbel 1000000 2500000
Manufactuerrs
& Expoerters
Pvt. Ltd.
14 Scient 500000
Infoormatics
India Pvt. Ltd.
15 Sevbro 500000
Domestic
Appliances Pvt.
Ltd.
16 Skylink 1500000
Softwares Pvt.
Ltd.
17 APT Properties 2000000
Pvt. Ltd.
18 Dhanvridhi 1000000
Financial
Services Pvt.
Ld.CIT(A)
19 Intelife 3500000
Marketing Pvt.
Ltd.
20 Kay Buildwell 1500000
Pvt. Ltd.
21 Kela Devi 2000000 2000000
Builders Pvt.
Ltd.
22 Wiseman 3000000 1500000
Marketing Pvt.
Ltd.
23 Shweta 2000000
Mehandi
Products Pvt.
Ltd.
24 Vaishno Devi 1000000
Land &
Building
Developers Pvt.
ltd.
TOTAL 8300000 1200000 8075000 25800000 7500000
5.3. I have examined the evidences filed and my observations / findings with regard to each case are as under:
Sl No. Applicant Companies OBSERVATIONS/FINDIGNS 9 ITA No. 302/Del/2014 The case was assessed for AY 2007-08 u/s 143(3) by the 1 Oracle Cables Pvt. Ltd. Department itself on 29.12.2009. Therefore, the question of non-existence of this co. does not arise The case was assessed for AY 2007-08 u/s 143(3) by the Department itself on 01.12.2009. Therefore, the question 2 Arsey Hosiery Pvt. Ltd of non-existence of this co. does not arise.
The IT return for AY 2011-12 was electronically filed on 08.03.2012 vide acknowledgment No.348672971080312. 3 Twince Traders Pvt. This information is available in the I T Department's own data base. Therefore, the question of non-existence of this co. does not arise.
Ltd.
The case was assessed for AY 1995-96 u/s 143(3) by the Department itself on 26.10.1998. The IT return for the AY 4 Chardham Impex Pvt. 2010-11 was also filed electronically on 31.03.2011 vide acknowledgement no.211242421310311. Therefore, the question of nonexistence of this co. does not arise. Ltd.
Copy of audited balance sheet for the year ending 31.03.2006 has been filed. IT records could not be 5 Vidur Builders Pvt. Ltd. produced The ITR for AY 2010-11 was electronically filed on 27.09.2010 vide acknowledgment No. 161381151270910. 6 Tejender Fabrication Therefore, the question of nonexistence of this co. does not arise.
Pvt. Ltd.
The case was assessed for AY 2006-07 u/s 143(3) by the Department itself on 26.12.2008. The ITR for AY 2010-11 7 Kaiser Marketing Pvt. was electronically filed on 25.09.2010 vide acknowledgment No. 159633301250910. Therefore, the question of non-existence of this co. does not arise. Ltd.
ITR for AY 2011-12 was filed on 29.03.2012 vide acknowledgment No.370700291290312. Copies of MCA 8 Indolon Hosiery P Ltd. filings and confirmations from the Directors were also filed. Therefore, the question of non-existence of this co. does not arise.
ITR for AY 2011-12 was filed on 31.03.2012 vide acknowledgment No.381694521310312. Copies of 9 Brainsoft Info audited balance sheet and confirmations from the Directors were also filed. Therefore, the question of non- existence of this co. does not arise.
Consultants Pvt. Ltd.
ITR for AY 2008-09 was filed on 26.09.2008 vide acknowledgment No.40183200260908 and ITR for AY 10 Chintapurni Builders 2011-12 was filed on 31.03.2012 vide acknowledgment No.380735971310312. Copies of audited balance sheet, share application and bank statement were also filed. Pvt. Ltd.
Therefore, the question of non-existence of this co. does not arise.
ITR for AY 2008-09 was filed on 22.03.2009 vide acknowledgment No.60418950220309. Copies of audited 11 Midas Touch Media balance sheet, share application and bank statement were also filed. Therefore, the question of non-existence of this co. does not arise.
Pvt. Ltd.
ITR for AY 2008-09 was filed on 29.03.2009 vide acknowledgment No.64402491290309 and ITR for AY 12 Multitech 2011-12 was filed on 29.03.2012 vide acknowledgment No.370520691290312. Copies of audited balance sheet and bank statement were also filed. Therefore, the 10 ITA No. 302/Del/2014 question of non-existence of this co. does not arise. Semiconductors Pvt.
Ltd.
ITR for AY 2008-09 was filed on 22.03.2009 vide acknowledgment No.60418950220309. Copies of audited 13 Ribbel Manufacturers balance sheet, share application and bank statement were also filed. Therefore, the question of non-existence of this co. does not arise.
& Exporters Pvt. Ltd.
The case was assessed for AY 2007-08 u/s 143(3) by the Department itself on 16.12.2009. Therefore, the question 14 Scient Informatics India of non-existence of this co. does not arise.
Pvt. Ltd.
ITR for AY 2008-09 was filed on 22.03.2009 vide acknowledgment No.60434730220309. Copies of audited 15 Sevbro Domestic balance sheet, share application and bank statement were also filed. Therefore, the question of non-existence of this co. does not arise.
Appliances Pvt. Ltd.
ITR for AY 2008-09 was filed on 22.03.2009 vide acknowledgment No.60411150220309 and ITR for AY 16 Skylink Softwares Pvt. 2011-12 was filed on 31.03.2012 vide acknowledgment No.381257601310312. Copies of audited balance sheet, share application and bank statement were also filed. Ltd.
Therefore, the question of non-existence of this co. does not arise.
Copy of audited balance sheet for the year ending 31.03.2009 has been filed. IT records could not be 17 APT Properties Pvt. produced. However, MCA master data shows the co.
active and having filed the balance sheet as on 31.03.2010. Thus, it cannot be said that the co. did not Ltd.
exist as on 31.03.2009. Co. appears to have the source for the investment.
ITR for AY 2011-12 was filed on 05.03.2012 vide acknowledgment No.346599241030312. Copy of the 18 Dhanvridhi Financial audited balance sheet as on 31.03.2009 was also filed.
Therefore, the question of non-existence of this co. does not arise. Co. appears to have source for the investment Services Pvt. Ltd.
ITR for AY 2011-12 was filed on 31.03.2012 vide acknowledgment No.382068051310312. Copy of the 19 Intelife Marketing Pvt. audited balance sheet as on 31.03.2009 was also filed.
MCA master data shows the co. active and having filed the balance sheet as on 31.03.2010. Therefore, the Ltd.
question of non-existence of this co. does not arise. ITR for AY 2011-12 was filed on 30.03.2012 vide acknowledgment No.374037341300312. Copy of the 20 Kay Buildwell Pvt. Ltd. audited balance sheet as on 31.03.2009 was also filed.
Therefore, the question of non-existence of this co. does not arise. Co. appears to have the source for investment. ITR for AY 2011-12 was filed on 20.03.2012 vide acknowledgment No.356042621200312. Copy of the 21 Kela Devi Builders Pvt. audited balance sheet as on 31.03.2009 was also filed.
Therefore, the question of non-existence of this co. does not arise. Co. appears to have the source for investment. Ltd.
Copy of audited balance sheet for the year ending 31.03.2006 has been filed. IT records could not be 22 Wiseman Marketing produced.11 ITA No. 302/Del/2014
Pvt. Ltd.
The return was processed for AY 2009-10 u/s 143(1) by the Department (CPC) itself on 17.09.2010 and refund 23 Shweta Mehandi issued. ITR for AY was filed on 26.09.2010 vide acknowledgment No. 160329921260910. Copy of the audited balance sheet as on 31.03.2009 was also filed. Products Pvt. Ltd.
Therefore, the question of non-existence of this co. does not arise. Co. appears to have the source for investment. ITR for AY 2011-12 was filed on 20.03.2012 vide acknowledgment No.356036291200312. Copy of the 24 Vaishno Devi & audited balance sheet as on 31.03.2009 was also filed.
Therefore, the question of non-existence of this co. does not arise. Co. appears to have the source for investment. Building Developers Pvt. Ltd.
5.4. It would be seen from the above table that it cannot be concluded that the share applicant companies did not exist or that the transactions were not established. Only in two case, viz. Vidur Builders Pvt. Ltd. and Wiseman Marketing Pvt. Ltd., copies of the ITRs could not be furnished by the appellant. Even in these cases, copies of the balance sheets filed indicate that the companies had the funds / sources to make investment in the share application towards the appellant company. The revenue cannot be taking two different stands. On the one hand the revenue is accepting and admitting compliance to its own laws and procedure by way of filing of ITR, payment of taxes, processing and issue of refunds, and also tax scrutiny of cases. On the other hand, the revenue cannot take the stand that the share applications are unexplained as some of the share applicant companies could not be physically located by the Inspector at the given address. For this there could be several reasons - the Inspector may not have done his job properly, or the applicant companies may have changed address. There is no comment by the revenue on the replies admittedly received from the applicant companies by post. There is no comment on the merit of the documents filed. When the appellant was not confronted with the Inspector's report, it cannot be alleged by the revenue that the appellant failed to establish the transactions. The appellant was even searched by the revenue but no such evidence was found. Public functionaries must act in a transparent and non-partisan manner. This does not appear to be the case.
5.5. In view of the above, the additions made in various years, i.e. Rs.83,00,000/- for AY 2006-07 (A.No.361/13-14), Rs. 12,00,000/- for AY 2007-08 (A.No.360/13- 14), Rs.80,75,000/- for AY 2008-09 (A.No.359/13-14), Rs,2,58,00,000/- for AY 2009-10 (A.No.358/13-14), and Rs.75,00,000/- for AY 2010-11 (A.No.357/13-14), on account of share applications / capital received cannot be held to be unexplained. The conclusion is not tenable in view of the evidence produced and must be deleted. I hold so accordingly for all these assessment years. The respective additions made for these AYs are deleted."
In the present Assessment Year 2008-09, the facts are identical and the CIT(A) has rightly followed the order of A.Y. 2006-07 passed by the same CIT(A). There is no need to interfere with the findings of the CIT(A). Therefore, appeal filed by the Revenue is dismissed."
9. Thus, the parties mentioned in present assessee's case were held genuine, creditworthiness and its identity was also accepted in case of Superb 12 ITA No. 302/Del/2014 Developers (supra). We further observe that each and every case law cited by the Ld. DR also highlights the point that the genuineness, identity and creditworthiness of the share applicant parties have to be established by the assessee. In the present case, the same has been done by the assessee. Therefore, the onus was discharged by the assessee company which was properly taken into account by the CIT (A). Thus, the order of the CIT(A) does not require any interference and appeal of the Revenue is dismissed.
8. In result, the appeal of the Revenue is dismissed.
Order pronounced in the Open Court on this 21st Day of JANUARY, 2021.
Sd/- Sd/-
(R. K. PANDA) (SUCHITRA KAMBLE)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 21/01/2021
R. Naheed
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
13 ITA No. 302/Del/2014